GPSOLO December 2010
Credit Card Processing for Solos
By David Leffler
Traditional credit card merchant accounts are cumbersome and expensive. They require you to sign a one- or two-year contract. You have to pay hundreds of dollars for equipment, as well as monthly maintenance fees and minimum monthly charges if you don’t meet a certain level of credit card activity. You also are tied to taking payments in your office if you don’t lug around with you the equipment for accepting credit card charges.
All of this can have a negative impact on your business. The fees are especially burdensome on a solo lawyer who doesn’t have the high volume of payments over which to spread these costs. As a result, many solos simply don’t accept credit cards in their law practice. Once again, a business tool that is available to larger enterprises is out of reach for many solo lawyers because of its cost.
It turns out that relief is in sight. A new product has come along that eliminates these obstacles and makes it possible for solos to accept credit cards in a way that is far more flexible than ever before. So step up and join the big boys. You are about to start taking credit cards in your law practice.
Picture this: You meet a potential client on the golf course, discuss his problems, and by the 18th hole not only does he agree to hire you, but he also pays you a retainer with his credit card even before hitting the showers. Would the ability to accept a payment from a client wherever you happen to be without the expense of a traditional merchant credit card account make a difference in the operation of your law practice? If your answer is yes, then close your dropped jaw and read on.
The Good . . .
The Square Card Reader ( www.squareup.com) is a new device that plugs into iPhones, iPads, the iPod touch, and Android OS cell phones. Once your application is approved, you install some software, insert the half-inch reader into the headphone jack, and, bingo, you can accept credit card payments on your device wherever you have access to the Internet.
Even better, you do not have the expenses typically associated with accepting credit cards. The Square Card Reader is free, there are no one- or two-year contracts, and you can use the device as little as you want without incurring any minimum monthly charges.
You could be having dinner with a client at a restaurant, discussing business, and take a payment against an invoice or for a retainer right there and then. This kind of efficiency when it comes to having clients pay you is important because it alleviates some of the difficulties with getting paid.
Let’s roll back the tape on that dinner scenario without the Square Card Reader. Your client agrees to pay you and promises that she will write the check and mail it out from her office tomorrow morning. Tomorrow comes, and then the next day, and the day after that. Perhaps you do get the check by then, or perhaps you politely wait a week and then call to remind your client about the check. Maybe this will be enough or maybe it won’t, but the point is that you’ve already waited a week and are in the uncomfortable position of having to call to remind your client to pay you. With the Square Card Reader you’ve gotten paid even before you’ve digested your meal.
In addition to its convenience and its low cost, the Square Card Reader has several neat features that should appeal to a solo lawyer. For instance, every time you take a charge, you can type in a note about it, which is useful for having a record of what service your client is paying for. A receipt—which can include a GPS location where the transaction occurred—can be sent to your client’s e-mail address. All payments are available on a secure online site and can be downloaded to a spreadsheet program.
The client signs directly on the screen with her finger. An amusing function, albeit not that useful, is if someone doesn’t like her signature, she can shake the device, which wipes out the signature, permitting her to sign again.
You can also enter credit card information without a signature if you are taking a payment over the phone.
There is a function for adding a tip, but I don’t think lawyers will get much use out of this.
Square charges 2.75 percent of the amount charged plus 15 cents per transaction where the card is swiped, or 3.5 percent of the amount charged plus 15 cents per transaction where the card is not present (e.g., keyed-in, over-the-phone charges).
Of course you can use this device to take payments in your office just as if you had a traditional credit card merchant account, but without all of the costs associated with those accounts. My guess is that it won’t be too long before legal billing software programs develop interfaces that automatically input Square transactions directly into your billing program.
The Bad . . .
One drawback that might be a problem for lawyers, although temporary, is that when first using the service there is a weekly limit of $1,000 that will be immediately sent to your bank account, with the balance arriving within 30 days. However, this limit eventually is raised, provided that there haven’t been any problems with your account. To me this is not a deal breaker. I can wait up to 30 days for my money, which is better than no payment at all.
One issue that you have with a credit card that you don’t have with a check or a bank wire is that clients could challenge the charge, which might happen if they feel that they didn’t get the services they were expecting (it’s hard for clients to understand that lawyers do not guarantee results). I think that this will be more or less of an issue depending on the area of law in which you practice. Divorce lawyers, beware. Corporate lawyers, I’d say no worries.
The Square Card Reader is a remarkable device that will change the way many people do business, from professionals to street vendors. It certainly has the potential for making a significant positive impact on your cash flow as a solo lawyer. You might even discover other uses for it. How about lending it to your kids for the lemonade stand that they set up in front of your house? Imagine your neighbors’ surprise when they hear your little ones ask, “Cash or credit?”
David Leffler is a member of the New York City law firm Leffler Marcus & McCaffrey LLC, which represents clients in business matters and litigation. Prior to that he was a solo attorney for more than a dozen years. In his spare time he blogs at staringatstrangers.com. You may write to him at email@example.com .Copyright 2010